Accounting Pronouncements | Recently Adopted Accounting Pronouncements Revenue Recognition and Financial Instruments On January 1, 2018, we adopted ASU No. 2014-09, Revenue from Contracts with Customers and related amendments (collectively, the “New Revenue Standard”) . The New Revenue Standard established a comprehensive new model for revenue recognition, which is codified in Topic 606 (see Revenue Recognition above), and provided guidance for certain costs associated with customer contracts. We adopted the New Revenue Standard using the modified retrospective method for contracts that were not completed as of January 1, 2018. Accordingly, comparative information for prior periods has not been restated and continues to be reported under the accounting standards in effect for those periods. Upon adoption of the New Revenue Standard, we recognized the cumulative effect of its initial application as a net increase to accumulated earnings of $25.1 million , net of related income taxes. The adoption of the New Revenue Standard also impacted the timing of recognition of certain fees charged to our customers in our consumer markets; however, the adoption has not had, and we do not expect it to have, a material impact on the overall timing or amount of revenue recognition. The primary impacts of the New Revenue Standard on our operating results relate to how we account for sales incentive costs (See Contract Acquisition and Fulfillment Costs above). Historically, we charged sales incentives to expense as incurred, except for incentives related to the consumer business in our Hughes segment, which were initially deferred and subsequently amortized over the related service agreement term. Under the New Revenue Standard, we continue to defer incentives for our consumer business; however, we now amortize those incentives over the estimated customer life, which includes expected contract renewal periods. In addition, we now defer certain sales incentives related to other businesses in our Hughes segment and amortize those incentives over the related service agreement term. As a result of these changes, we have recognized additional contract assets on our Condensed Consolidated Balance Sheets and the costs generally are recognized as expenses over a longer period of time in our Condensed Consolidated Statements of Operations . The adoption of the New Revenue Standard by one of our unconsolidated entities had a similar impact on our investment in the unconsolidated entity, which we account for using the equity method. Additionally, on January 1, 2018, we prospectively adopted the applicable requirements of the New Investment Standard. The New Investment Standard substantially revises standards for the recognition, measurement and presentation of financial instruments, including requiring all equity investments, except for investments in consolidated subsidiaries and investments accounted for using the equity method, to be measured at fair value with changes in the fair value recognized through earnings. The New Investment Standard permits an entity to elect to measure an equity security without a readily determinable fair value at its cost, adjusted for changes resulting from impairments and observable price changes in orderly transactions for identical or similar securities of the same issuer. It also amends certain disclosure requirements associated with equity investments and the fair value of financial instruments. Upon adoption of the New Investment Standard on January 1, 2018, we recorded a $10.5 million charge to accumulated earnings to include net unrealized losses on our marketable equity securities then designated as available for sale, which previously were recorded in Accumulated Other Comprehensive Loss in our Condensed Consolidated Balance Sheets. For our equity investments without a readily determinable fair value that were previously accounted for using the cost method, we have elected to measure such securities at cost, adjusted for impairments and observable price changes. We expect our future net income or loss to be more volatile as a result of these changes in accounting for our investments in equity securities that were previously accounted for as available for sale or using the cost method. The cumulative effects of changes to the impacted line items on our Condensed Consolidated Balance Sheet as of January 1, 2018 for the adoption of these standards were as follows: Balance at December 31, 2017 Adjustments Due to the Balance at January 1, 2018 New Revenue Standard New Investment Standard (In thousands) Assets: Trade accounts receivable and contract assets, net $ 196,840 $ (7,103 ) $ — $ 189,737 Other current assets $ 91,671 $ 533 $ — $ 92,204 Investments in unconsolidated entities $ 161,427 $ 6,917 $ — $ 168,344 Other noncurrent assets, net $ 214,814 $ 22,545 $ — $ 237,359 Total assets $ 8,750,014 $ 22,892 $ — $ 8,772,906 Liabilities: Contract liabilities $ 65,959 $ (1,542 ) $ — $ 64,417 Accrued expenses and other $ 82,647 $ 255 $ — $ 82,902 Deferred tax liabilities, net $ 436,023 $ 3,122 $ — $ 439,145 Other noncurrent liabilities $ 128,503 $ (4,068 ) $ — $ 124,435 Total liabilities $ 4,572,629 $ (2,233 ) $ — $ 4,570,396 Stockholders’ Equity: Accumulated other comprehensive income (loss) $ (130,154 ) $ — $ 10,467 $ (119,687 ) Accumulated earnings (losses) $ 721,316 $ 25,125 $ (10,467 ) $ 735,974 Total EchoStar Corporation stockholders’ equity $ 4,177,385 $ 25,125 $ — $ 4,202,510 Total liabilities and stockholders’ equity $ 8,750,014 $ 22,892 $ — $ 8,772,906 Our adoption of these standards impacted the referenced line items on our Condensed Consolidated Balance Sheet, Statement of Operations and Statements of Comprehensive Income (Loss) as follows: As of June 30, 2018 As Reported Adjustments Due to the Balances If We Had Not Adopted the New Standards Balance Sheet New Revenue Standard New Investment Standard (In thousands) Assets: Trade accounts receivable and contract assets, net $ 186,962 $ 7,129 $ — $ 194,091 Other current assets $ 15,889 $ (533 ) $ — $ 15,356 Investments in unconsolidated entities $ 156,022 $ (6,240 ) $ — $ 149,782 Other noncurrent assets, net $ 258,237 $ (29,878 ) $ — $ 228,359 Total assets $ 8,791,985 $ (29,522 ) $ — $ 8,762,463 Liabilities: Contract liabilities $ 72,776 $ 978 $ — $ 73,754 Accrued expenses and other $ 68,195 $ (255 ) $ — $ 67,940 Deferred tax liabilities, net $ 456,401 $ (4,319 ) $ — $ 452,082 Other noncurrent liabilities $ 124,252 $ 2,414 $ — $ 126,666 Total liabilities $ 4,547,733 $ (1,182 ) $ — $ 4,546,551 Stockholders’ Equity: Accumulated other comprehensive loss $ (154,011 ) $ — $ 40,190 $ (113,821 ) Accumulated earnings $ 792,278 $ (28,340 ) $ (40,190 ) $ 723,748 Total EchoStar Corporation stockholders’ equity $ 4,244,252 $ (28,340 ) $ — $ 4,215,912 Total liabilities and stockholders’ equity $ 8,791,985 $ (29,522 ) $ — $ 8,762,463 For the three months ended June 30, 2018 As Reported Adjustments Due to the Balances If We Had Not Adopted the New Standards Statement of Operations New Revenue Standard New Investment Standard (In thousands) Revenue: Services and other revenue - other $ 375,445 $ 808 $ — $ 376,253 Total revenue $ 525,957 $ 808 $ — $ 526,765 Costs and expenses: Cost of sales - services and other (exclusive of depreciation and amortization) $ 151,157 $ 1,548 $ — $ 152,705 Selling, general and administrative expenses $ 103,074 $ 2,434 $ — $ 105,508 Total costs and expenses $ 451,192 $ 3,982 $ — $ 455,174 Operating income (loss) $ 74,765 $ (3,174 ) $ — $ 71,591 Other income (expense): Interest expense, net of amounts capitalized $ (61,534 ) $ 126 $ — $ (61,408 ) Gains (losses) on investments, net $ 65,396 $ — $ (31,533 ) $ 33,863 Equity in earnings (losses) of unconsolidated affiliates, net $ (2,058 ) $ 97 $ — $ (1,961 ) Total other income (expense), net $ 20,721 $ 223 $ (31,533 ) $ (10,589 ) Income (loss) from continuing operations before income taxes $ 95,486 $ (2,951 ) $ (31,533 ) $ 61,002 Income tax benefit (provision) $ (17,802 ) $ 816 $ — $ (16,986 ) Net income (loss) $ 77,684 $ (2,135 ) $ (31,533 ) $ 44,016 Net income (loss) attributable to EchoStar Corporation common stock $ 77,222 $ (2,135 ) $ (31,533 ) $ 43,554 Earnings (losses) per share: Basic $ 0.80 $ (0.02 ) $ (0.33 ) $ 0.45 Diluted $ 0.80 $ (0.02 ) $ (0.33 ) $ 0.45 For the three months ended June 30, 2018 As Reported Adjustments Due to the Balances If We Had Not Adopted the New Standards Statement of Comprehensive Income (Loss) New Revenue Standard New Investment Standard (In thousands) Net income (loss) $ 77,684 $ (2,135 ) $ (31,533 ) $ 44,016 Other comprehensive income (loss), net of tax: Unrealized gains (losses) on available-for-sale securities and other $ 547 $ — $ 31,533 $ 32,080 Total other comprehensive income (loss), net of tax $ (43,183 ) $ — $ 31,533 $ (11,650 ) Comprehensive income (loss) $ 34,501 $ (2,135 ) $ — $ 32,366 Comprehensive income (loss) attributable to EchoStar Corporation $ 34,624 $ (2,135 ) $ — $ 32,489 For the six months ended June 30, 2018 As Reported Adjustments Due to the Balances If We Had Not Adopted the New Standards Statement of Operations New Revenue Standard New Investment Standard (In thousands) Revenue: Services and other revenue - other $ 730,485 $ 2,026 $ — $ 732,511 Total revenue $ 1,027,749 $ 2,026 $ — $ 1,029,775 Costs and expenses: Cost of sales - services and other (exclusive of depreciation and amortization) $ 299,902 $ 2,477 $ — $ 302,379 Selling, general and administrative expenses $ 206,349 $ 4,855 $ — $ 211,204 Total costs and expenses $ 894,974 $ 7,332 $ — $ 902,306 Operating income (loss) $ 132,775 $ (5,306 ) $ — $ 127,469 Other income (expense): Interest expense, net of amounts capitalized $ (124,285 ) $ 218 $ — $ (124,067 ) Gains (losses) on investments, net $ 28,733 $ — $ (50,657 ) $ (21,924 ) Equity in earnings (losses) of unconsolidated affiliates, net $ (3,067 ) $ 677 $ — $ (2,390 ) Total other income (expense), net $ (63,863 ) $ 895 $ (50,657 ) $ (113,625 ) Income (loss) from continuing operations before income taxes $ 68,912 $ (4,411 ) $ (50,657 ) $ 13,844 Income tax benefit (provision) $ (12,399 ) $ 1,197 $ — $ (11,202 ) Net income (loss) $ 56,513 $ (3,214 ) $ (50,657 ) $ 2,642 Net income (loss) attributable to EchoStar Corporation common stock $ 55,671 $ (3,214 ) $ (50,657 ) $ 1,800 Earnings (losses) per share: Basic $ 0.58 $ (0.03 ) $ (0.53 ) $ 0.02 Diluted $ 0.57 $ (0.03 ) $ (0.52 ) $ 0.02 For the six months ended June 30, 2018 As Reported Adjustments Due to the Balances If We Had Not Adopted the New Standards Statement of Comprehensive Income (Loss) New Revenue Standard New Investment Standard (In thousands) Net income (loss) $ 56,513 $ (3,214 ) $ (50,657 ) $ 2,642 Other comprehensive income (loss), net of tax: Unrealized gains (losses) on available-for-sale securities and other $ 15 $ — $ 13,641 $ 13,656 Other-than-temporary impairment loss on available-for-sale securities in net income $ — $ — $ 37,016 $ 37,016 Total other comprehensive income (loss), net of tax $ (35,123 ) $ — $ 50,657 $ 15,534 Comprehensive income (loss) $ 21,390 $ (3,214 ) $ — $ 18,176 Comprehensive income (loss) attributable to EchoStar Corporation $ 21,347 $ (3,214 ) $ — $ 18,133 Restricted Cash and Cash Equivalents ASU No. 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash requires restricted cash and restricted cash equivalents to be included with cash and cash equivalents in the statement of cash flows. We adopted ASU No. 2016-18 as of January 1, 2018. As a result, the beginning and ending balances of cash and cash equivalents presented in our Condensed Consolidated Statements of Cash Flows include amounts for restricted cash and cash equivalents, which historically were not included in such balances, and receipts and payments of restricted cash and cash equivalents, exclusive of transfers to and from unrestricted accounts, are reported in our Condensed Consolidated Statements of Cash Flows. The adoption of this accounting standard d id not have a material impact on our Statements of Cash Flows and related disclosures. Recently Issued Accounting Pronouncements Not Yet Adopted In February 2016, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2016-02, Leases (Topic 842) . This standard requires lessees to recognize assets and liabilities for all leases with lease terms more than 12 months, including leases classified as operating leases. The standard also modifies the definition of a lease and the criteria for classifying leases as operating leases or finance leases. ASU No. 2016-02 is effective for fiscal years beginning after December 15, 2018 and interim periods within those fiscal years. Early adoption is permitted. We plan to adopt the new standard as of January 1, 2019. As amended in July 2018, the new standard may be applied either on a modified retrospective basis to the earliest period presented in our consolidated financial statements or as of the adoption date without restating prior periods. The new standard provides certain practical expedients that we may elect to apply on the adoption date. We continue to evaluate the impact of the new standard and available adoption methods on our consolidated financial statements and related disclosures. In June 2016, the FASB issued ASU No. 2016-13, Measurement of Credit Losses on Financial Instruments , which introduces an approach based on expected losses to estimate credit losses on certain types of financial instruments rather than incurred losses. It also modifies the impairment model for available-for-sale debt securities and provides for a simplified accounting model for purchased financial assets with credit deterioration since their origination. ASU No. 2016-13 is effective for fiscal years beginning after December 15, 2019 and interim periods within those fiscal years. Early adoption is permitted. We are assessing the impact of adopting this new accounting standard on our consolidated financial statements and related disclosures. In March 2017, the FASB issued ASU No. 2017-08, Receivables - Nonrefundable Fees and Other Costs (Subtopic 310-20): Premium Amortization on Purchased Callable Debt Securities . This update shortens the amortization period of premiums on certain purchased callable debt securities to the earliest call date, effectively reducing interest income on such securities prior to the earliest call date. ASU No. 2017-08 is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. Early adoption is permitted. We are assessing the impact of adopting this new accounting standard on our consolidated financial statements and related disclosures. |